China's yuan little changed as c.bank keeps firm hand on currency

By Michelle Chen HONG KONG, Nov 19 (Reuters) - China's yuan was littlechanged against the dollar on Tuesday, as the central bankappears to prefer keeping it stable by intervening in the marketvia state-owned banks. The "redback" has outperformed most other Asian currenciesand has gained 2.2 percent so far this year amid a volatileglobal economic environment, raising concerns that a strongeryuan will hurt China's exporters. China's Commerce Ministry said on Tuesday that a fast paceof yuan appreciation had squeezed exporters' profits and it wasdifficult for the world's second-largest economy to achieve its8 percent trade growth target this year. Spot yuan traded at 6.0915 near midday, virtuallyunchanged from the previous close. It traded within a very tightrange between 6.0920 and 6.0915 in the morning. The People's Bank of China (PBOC) fixed the yuan's midpoint at 6.1317, some 0.02 percent stronger than theprevious day's 6.1332 to reflect a decline in the global dollarindex. "The central bank has been buying dollars in the past fewdays once the dollar falls, which makes it difficult for us totrade," said a trader at a Chinese bank in Shanghai. In the offshore market, the Chinese currency rose to arecord high of 6.0672, leaving the spread between spot onshoreand offshore yuan at 230 pips, its widest since Jan. 22. Much of that gap has been driven by a rally in offshoreyuan, while the onshore currency has stayed relatively subduedin a tiny range thanks to the relentless intervention bystate-run banks. Market watchers say wide-ranging reforms promised by Beijingin the Communist Party's third plenum has helped lift globalinvestors' confidence in the Chinese economy as well as itscurrency. "The yuan is likely to move within a narrow range for awhile before a fresh round of appreciation in December whichwill see it reach 6.05 by the end of the year," the trader said.